Category: IRS

Utah Accountant Who Filed $393 Million in Fake Tax Refunds Can Never Ever Ever Do Taxes Again

Dick Jenkins is a bad, bad tax accountant; the Justice Department says so.

“Given the sheer brazenness of Jenkins’s conduct, he is essentially stealing … from the U.S. Treasury,” said U.S. District Judge Dale A. Kimball, who entered the civil injuction against him last week. Jenkins was accused of filing $393 million in fraudulent tax refunds, including a single $210 million dollar refund for one customer and $402,920 for himself that he didn’t have coming (I don’t care how good you think you are at deductions, that’s BS).


Jenkins was not barred by the court from doing taxes forever because he screwed his clients (they received $294,292 in fake refunds) but because “Jenkins’s conduct results in irreparable harm to the United States.” You heard right, the Salt Lake Federal Court is pissed because he tried to remove $393 million from the Treasury through tax fraud, who cares about the clients?

Maybe this is what the PCAOB was talking about when they mentioned unusual transactions without giving specifics. I’d say it qualifies.

Salt Lake Federal Court Bars CPA from Preparing Tax Returns for Others [Media Newswire]

Wednesday Addams’ $180,000 Tax Trouble

Go figure, Christina Ricci has been hit with an IRS lien to the tune of $179,568.30 for unpaid 2008 taxes. Though the lien news seems to have taken her quite by surprise, Ricci’s rep told TMZ that she is taking “immediate action to address it in a responsible manner.”

That’s funny, I thought a responsible manner would have meant paying the IRS $179,568.30 before April 15th, 2009 when it was due but maybe that’s just me.


Oddly enough, if you’ve ever been hit with an IRS lien (hello, Nic Cage) you know that the Service doesn’t just one day decide to slap a lien on you without first attempting to give you a hint that the proverbial shit is preparing to hit the fan. Generally this comes in the form of correspondence (lots of it) indicating that there is an issue.

Helpful bunch that they are, the IRS will almost always work with tax delinquents as long as said delinquents return their letters and get in touch to say “Hey, sorry, totally forgot to give you that $180,000 that I owe you.” In the case of Christina Ricci, we’re pretty sure her IRS letters must have gotten lost in the fan mail and creepy stalker packages. Yeah, that must it.

Christina Ricci — Ya Got $179k Layin’ Around? [TMZ]

Help the IRS Improve Its Service on the Taxpayer Advocacy Panel

If you are some kind of tax activist, not a felon and ready to serve your country, we may have the volunteer opportunity of a lifetime for you: Serving on the IRS’ Taxpayer Advocacy Panel (TAP). The deadline for applications is this Friday and we’re pretty sure the Service has been swamped with would-be heroes vying for a chance to provide a voice to the poor, abused little taxpayer.


“TAP members represent the typical taxpayer and provide the IRS with invaluable insights that are crucial to sound tax administration,” said IRS Commissioner Doug Shulman.

To qualify, you must pass an FBI fingerprint check (sorry, Lone Wolves, you’re pretty much disqualified right off the bat and will have to stick to crashing planes into IRS buildings if you want your voice to be heard), not be a lobbyist, and of course be caught up on your own tax bills.

Think of it like a focus group for taxes except unlike traditional focus groups, you won’t be getting $75 for an hour’s worth of opinions. TAP members serve a 3 year term and are expected to commit 300 – 500 hours per year serving the Service taxpayer. Members are required to attend a yearly meeting in Washington, DC each fall, at least one face-to-face subcommittee meeting with other members in their region and must participate in a monthly conference call.

So go on, little taxpayers, give the IRS a piece of your mind. And 500 hours of your time, of course.

Nonviolent Measures Prevail in Case Involving Phony IRS Agent

You could make the assumption that since Sherry Lynn Vertoch was merely posing as an IRS agent that the hoteliers didn’t have any cause to take any violent action. Had she actually been an IRS agent we probably could have expected some sort of shooting, bombing, plane-crashing or torture performed for the sake of American tradition.

A woman who racked up two years of unpaid lodging in Novato while posing as a federal tax agent was granted probation by a federal judge Tuesday and ordered to pay $55,000 to the hotel owners.Sherry Lynn Vertoch pleaded guilty in February to impersonating a federal officer. Chief U.S. District Judge Vaughn Walker in San Francisco accepted a recommendation by federal prosecutors and Vertoch’s lawyer to place her on supervised probation for five years rather than sending her to prison.

Fake IRS agent told to pay $55,000 hotel bill [SF Chronicle]

Of Course the IRS Had a Reason for Raiding Your Home

Earlier in the week we mentioned an Indiana man who was suing the Feds for wrongful death because his wife committed suicide after an IRS raid.

Well, it turns out that the raid wasn’t a training exercise.

A Huntertown man who federal authorities say earned more than $1.7 million in assets but did not report the earnings on income tax filings has been charged in a 23-count indictment by a federal grand jury seated in South Bend.

James A. Simon, 59, faces charges of filing false federal income tax returns, failure to file reports of foreign bank and financial accounts, fraud involving private financial aid, and fraud involving federal financial aid, all for an alleged scheme that ran 2003-2006.

Through involvement with five separate businesses – foreign and domestic – Simon is alleged to have not reported funds obtained as earned income, but instead claimed monies as nontaxable loans and advances.

Simon spent all but about $50,000, the indictment alleges.

The wife might be better off.

IRS strikes back in 23-count indictment for Huntertown man [Fort Wayne News-Sentinel]

Free Ice Cream Outside the IRS Building Should Briefly Distract Any Protesters

Just when you thought things couldn’t get more exciting in the world of overeating, Dairy Queen has announced that it will be handing out free ice cream in front of the IRS Building in DC tomorrow at 10th St. and Pennsylvania Ave. NW.

According to the Washington Business Journal, the Blizzardmobile will be parked outside and mini blizzards will handed out to “taxpayers and accountants” (why didn’t they just say “everyone”?).


This momentous occasion not only marks the end of the traditional return filing season but it is also marking the Blizzard’s 25th birthday. This might, just might, cajole some Tea Partiers to leave their homes as opposed to marching on the Internet (especially since there doesn’t appear to be a limit per taxpayer/accountant).

However! The window of opportunity is short and you’ll only have from noon to 1 pm to get your miniature cup of refined sugary goodness. One might think that since Doug Shulman might be anti-pizza that he also might have something against blended ice cream confections. But on the other hand, Warren Buffet didn’t get filthy rich by giving away crackalicious deserts for free now, did he?

Free ice cream outside IRS building [Washington Business Journal]

Man Blames IRS Raid for Wife’s Suicide

The widower of a woman who committed suicide three days after ten armed IRS agents raided their home in 2007 is suing the U.S. Government.

Federal court papers say Fort Wayne resident Denise Simon left behind a note stating she could not “live in terror of being accused of things I did not do.”

The lawsuit filed by James Simon in U.S. District Court in Fort Wayne says Denise Simon and her 10-year-old daughter were the only ones home when about 10 armed IRS agents raided their residence on Nov. 6, 2007.

The suit also alleges IRS agents made misleading statements to obtain a search warrant.

Pre-tay sure this is the last thing the Service needs to be associated with. The IRS didn’t immediately return our call seeking comment. An IRS spokeswoman got back to us but due to federal disclosures laws, the IRS not permitted to discuss a specific taxpayer case.

Ind. man blames IRS for wife killing herself 3 days after agents raided their home [Fox 59 WXIN]

IRS Agent Who Threw Temper Tantrum Faces 55 Years for Threatening Treasury Agents, Filing False Returns

Last summer we told you about an IRS agent who threw a temper tantrum after threatening to kill Treasury Agents they showed up to search his home.

Just briefly refresh, after the agents stopped Albert Bront from going back into his house, where he kept three loaded guns (no doubt they were Remingtons), he was shoved into the back of the car where “he kicked the front seat of the law enforcement vehicle and pounded the door with his elbow.”


Besides the small matter of telling Federal Agents that ‘I’m Going to Kill All of You!’ Bront has also been indicted for filing false returns and helping others file false tax returns. Web CPA reports that he is convicted on all 16 counts in the indictment he faces 55 years in adult prison.

While we are firmly against the violence, we fully support seat kicking, foot stomping, pouting and all around conniption fits for those that feel wronged by the IRS. At the very least, it’s more effective than marching on the Internet.

IRS Agent Indicted for Threatening Investigators [Web CPA]

IRS Checks Sole Proprietorships Off Its “To Audit” List

This morning we shared some best practices on how to keep your ass out of hot water should an IRS audit befall you. The concern is that the government spending is out of control, huge deficits yada yada yada, the IRS will be knocking on more doors.


For the most part, everyone has been covered – large corporations, millionaires, possibly temptresses, the list is thorough.

Well, now it appears that the last entity type standing, the sole proprietorship will join the rest as an IRS target. IRS-criticizer-in-chief J. Russell George’s TIGTA issued another report but this time it cites sole proprietorships for “$68 billion of the $345 billion tax gap in 2001,” in underreported income. Web CPA reports George’s thoughts:

“Sole proprietors who underreport their income can create an unfair burden on honest taxpayers and diminish the public’s respect for the tax system,” said TIGTA Inspector General J. Russell George in a statement. “It is imperative that the IRS institutes policies to address this problem.”

How’s this for addressing a problem? The Internal Revenue Code, you my have heard, is mind-numbingly complex. Sole proprietorships, out of all the entity structures, are the least equipped to ensure compliance with the tax law. Auditing more of them will not result in increased compliance but rather enormous costs to their businesses. As for “diminish the public’s respect for the tax system,” didn’t that ship sail ages ago?

IRS to Step up Audits of Sole Proprietors [Web CPA]

Things That You Should Not, Under Any Circumstances, Do If You’re Audited by the IRS

In case you’re illiterate or generally ignorant about the reputation of our government, you know that there’s a ginormous deficit that our Congressional representatives like to crow about ad nauseam. And because squawking will only get you so many votes, many in Congress have decided that tasking the IRS (and thus setting up an easy scapegoat) with scraping together more revenues.

Accordingly, the IRS is not only hassling people for their milk money but they are also ramping up the number of audits of wealthy individuals.


The Journal warns us about this increasing number of financial DREs, noting that many rubes get the notice in the mail, freak the hell out and cut a check to the Treasury. However, if you’ve got a solid case against the Service or balls of concrete, than there are some tips that you would be wise to heed:

“Hire the wrong tax preparer” – If your tax pro had the unfortunate luck to get swept up in Operation Brass Tax, then you’re obviously in bad shape. If you’ve got the means, don’t cheap out on the Mom & Pop (sorry Moms and Pops out there) tax prep shop and find a qualified CPA, attorney or enrolled agent to guide you through this nightmare.

“The Ostrich approach” – The strategy of simply ignoring the IRS will work about as well as bulldozing your house.

“Frivolity” – In other words, the Irwin Schiff method. Arguing that the 16th Amendment to the Constitution is a one big joke never impresses the IRS or judges.

“Automatic Surrender” – You may be surprised to learn that the IRS is not the omnipotent federal agency that it may implicitly claim to be in its letter. Long story short, don’t just take them at their word, unless you’re the type that wants to pay more taxes.

Of course there are several other strategies that the Journal omits that you should want to avoid, including:

Violent Retaliation – No one wins here.

Claiming to be a celebrity – Fame has yet to prove an effective deterrent to IRS nagging.

Cry about it – The IRS, while sympathetic, will not be swayed by tears.

While everything listed above is tempting, we advise getting professional help and it probably won’t hurt to keep the proceedings cordial.

How to Fight the IRS [WSJ]

Panic Isn’t Necessary if Your Tax Preparer Got Swept Up in “Operation Brass Tax”

With less than a week until April 15th, it’s safe to assume that some people are finally getting a tad anxious about the upcoming deadline. If you live in New York and happen to be one of these procrastinators, it may be wise to check with your tax professional, not only because they hate it when you show up on the 13th – 15th with nary a clue about what you earned in 2009 but also because if you’re really unlucky, your tax pro instead was just total shiester and got caught up in “Operation Brass Tax.”


First off, we’ll just say that we’re not sure who at the U.S. Attorney’s Office for the Southern District of New York or the IRS’s Criminal Investigation Division was given the modest charge of naming this particular operation but it obviously sucks. We’re not expecting you have an imagination like JK Rowling or anything but guys, c’mon.

But enough with trivial matters, the main concern is that there are many New Yorkers that are completely going batshit crazy because A) they recently found out that their tax preparer was a robbing them blind and B) they have no idea how they are going to get their tax return filed in less than a week without help because reading the instructions is NOT. AN. OPTION.

Twenty-six phony tax experts in Manhattan and the Bronx have been charged by the SDNY/IRS for pulling a smorgasbord of scams including, “stolen identities of children to falsely claim them as dependents on clients’ returns; claiming “business losses” from fictitious businesses; using stolen identities, including Social Security numbers, of deceased individuals to list as the ‘taxpayers’ on fraudulent returns, and taking the resulting refunds themselves.”

All this chicanery has U.S. Attorney Preet Bharara upset because these tax professionals are supposed to be the good guys!

U.S. Attorney Preet Bharara and IRS Special Agent-in-Charge Patricia Haynes unsealed charges Thursday against the tax preparers. Sixteen were in custody, four had been previously charged and face new charges, and six remain at large. “Professional tax preparers are supposed to be gatekeepers, not facilitators of fraud,” said Bharara in a statement.

Some might argue that this is just another reason why regulating tax preparers is the best idea the IRS has ever had. Of course then you remember that these regulations will probably drive these tax prep lemonade stands underground anyway.

While that’s another matter entirely, there’s no cause for concern. There’s plenty of tax gurus in New York like the guy who got mixed reviews on Craigslist. If venturing to Queens isn’t a solution then you can always, you know, file the extension.

26 NYC Tax Preparers Charged with Tax Fraud [Web CPA]
More New York Tax Trouble:
Investigation Reveals that 30% of Tax Preparers in NYC Lied About Rapid Refunds